Signs like this appear throughout Lehigh

Editor’s Note: Lehigh Acres, like many communities and municipalities across the country, finds itself in what many are calling a “mini depression,” something that has not been seen since the Great Depression of the 1930s. Lehigh Acres, a platted community from the 1950s, faces troubled times. Unemployment is high in Lehigh. Churches and agencies like Lehigh Community Services are struggling to provide food for many in the community.

Many people who cannot pay their rent or mortgage payments turn to agencies that can only provide some financial help. With the help, the money line ends and residents are left to fight for themselves.

The community is facing several crises. The fire department is in trouble and layoffs may be the only solution to save the department and ambulance service. Unofficial polls conducted by The Citizen over the past week show that most voters are against having to pay an additional “special assessment” tax to save the fire department. The ECWCD has a multi million shortfall in its budget.

Despite reports by some in the community that homes are beginning to sell in Lehigh Acres, the county has not reported any closings in Lehigh for the past several weeks.

The Lehigh Acres Citizen has taken a close look into the workings of local agencies and has come up with this comprehensive look into the financial problems facing Lee County and especially Lehigh Acres. It’s a story of record with some commentary shown where we believe there are problems. It has taken several weeks to compile this information.

Kevin Shea, who is associated with The Citizen, has gone through records at the courthouse, asked for financial records from the ECWCD and the Lehigh Acres Fire Dept. What we have found is not pleasant news for Lehigh and some believe the worse is yet to come financially.

This special report is intended to tell readers what is happening in simple terms and what may have to be done to correct the problems. Those who have been elected to serve on local boards have one of the greatest challenges in Lehigh’s history before them. This is The Citizen’s attempt to put these financial issues in perspective. The following report affects every resident in Lehigh Acres in some way.

TAX INCREASES: The Board of County Commissioners approved a millage increase for the Lehigh Street Lighting District from .557 to 1.904 mil, a 241 percent increase. The Lehigh Fire District just authorized a special election to approve a $12.9 million tax increase. The East County Water Control District is considering a 20 percent tax increase.

ECONOMIC REALITY: Lehigh Acres home defaults have skyrocketed.

According to RealtyTrac, a national firm that tracks foreclosures, home defaults in Lehigh Acres have increased from 3,259 on July 10 to 9,457 a few days ago. Some 17,978 homes are in some status of pre-foreclosure. Sheriff sales have increased from 1,367 to 4,888 in the last week.

Karen Weaver, global head of securitization research at Deutsche Bank AG said in the Wall Street Journal on July 16 that “the steepest losses are on subprime loans, where lenders generally are recovering just 26 percent of the original amount.”

For example a home with a $100,000 mortgage is now selling for $26,000. A sign outside a real estate office in Lehigh Acres advertises “Foreclosures from $25,000.”

Holders of subprime mortgage bonds have flooded the market with foreclosed homes.

The WSJ also reported that data “in the Atlanta area shows that trusts managing pools of securitized mortgages sold six times as many properties as banks during the six months ended March 31.

National unemployment has risen to 9.5 percent. The U-6 measure of unemployment which includes discouraged workers jumped to 16.5 percent. Average hours worked has decreased to 33 hours per week. The William SGS Alternate Unemployment Measure is now 20.6 percent. The Center for Labor Market Studies in Boston put U.S. unemployment at 18.2 percent. Depending on the measure used the range is 16 to 20 percent.

David Rosenberg, formerly the chief economist with Merrill Lynch, said “one in three among the unemployed have been looking for a job for more than six months and still can’t find one.”

Economist Rosenberg works for Canada’s Gluskin Sheff.Hemost recently was Merrill Lynch’s chief North American economist, where he correctly warned about the housing and credit collapse and recession in advance.

Since home prices peaked in 2006, the Case/Shiller Home Price Index has fallen 34 percent. This was cause by defaults and delinquencies in the subprime mortgage market.

With home loans being reset in the next two to three years and large numbers of homes are under water (loan amount greater than home value) another massive wave of defaults in the prime and Alt A loan market is expected.

The Federal Reserve of Boston stated only three percent of seriously delinquent loans have been renegotiated. One-half of renegotiated loans fail anyway.

The Bureau of Economic and Business Research at the University of Florida has stated that the 2008 population projection for Lee County was 631,000. For the four zip codes of Lehigh Acres (33936, 33971, 33972, and 33974) the population estimate was 54,272.

The State of Florida Agency for Workforce Innovation stated that Lee County unemployment for June 2009 was 13 percent and for Lehigh Acres depending on zip code from 11.2 percent to 13.2 percent. A conservative estimate based on discouraged workers would suggest an unemployment rate of 19.8 percent or more for Lehigh Acres.

Another way to look at economic difficulty is to review food stamp and subsidized school lunch programs in Lehigh Acres. Food stamps are at 9.64 percent, and subsidized school lunches for local schools average more than 70 percent.

John Brock of the Economic Development Office of Lee County confirmed that the per capita income for 2008 for Lee County was $ 31,812 and Lehigh Acres was $22,063. (Source: Decision Data Recourses).

ECWCD REALITY- The District is facing a more than $700,000 deficit and according to Chairman Desmond Barrett, that’s a $1.2 million budget shortfall. The Finance/Budget Advisory Committee recommended a 20 percent tax increase. If enacted the District would have raised taxes 50 percent over the last four budget years.

Between 2002 through 2006, Florida state and local government spending has increased from $93 billion to $151 billion.

In recent years, the ECWCD staffing has increased from 25 to 33. Payroll costs are more than $2.5 million.

With the end of the speculative bubble and massive over spending by government it is time to bring things in line with reality.

Excluding part-time positions, employee pay and benefits range from two to seven times local per capita income. If an employee of the ECWCD starts at age 18, he or she can retire after 30 years at age 48. Retirement benefits are calculated on the highest paid years. The employee easily could receive more in retirement than his working years. Normal life expectancy exceeds 80 years. A total of 30 years of work cannot support 50 years of leisure.

This cannot be sustained over the long term. Additionally since the employee does not contribute to the retirement fund and is wholly paid by the taxpayer, the result must be skyrocketing taxes. The current system will crush private paid employees and businesses. A primary cause of the recent GM bankruptcy is the crushing burden of pay and retirement benefits.

The District must take immediate action this budget year and bring itself into line with economic and financial reality. All noncore functions must be eliminated. The District currently owns 22 road bridges, many intersections, and three parks. Roads and parks are the constitutional function of county government. Aggressive action needs to be taken with the legislative delegation and governor to force Lee County to assume responsibility for all parks and roads.

Pay and benefits must be frozen.

Recently added positions need to be eliminated including non-core and part-time jobs.

Health benefits must align with the private sector. Employees should pay 25 percent of the cost. Single federal employees pay 25 percent of their health costs.

Family coverage should be offered at the group rate and paid by the employee.

A four percent merit raise to all employees plus cost of living adjustments creates a compounding out of control escalation that will create over time a greater and greater disparity between those who pay taxes and the public sector who receive the benefits. At $50,000 a year in 25 years the annual pay will be $286,643 at a 7.5 percent rate. This is a major reason why ordinary people are getting poorer and poorer. It is the simple consequence of the compound interest rule.

An early out has been proposed. If an employee is 62 he can retire with regular benefits and receive a $60,000 bonus over five years, a double dipping windfall.

A contract could be made with the Lee County Sheriff to provide jail inmate labor to clean the canal banks of trash. These inmates could thus give back to society for their misdeeds.

If the above reforms are carried out, more than $900,000 will be saved. Public sector employees and their pay and benefits must conform to private sector reality. No longer can public sector compensation be 200 percent to 300 percent or more than the prevailing rate.

LEHIGH FIRE DISTRICT:

And the Lehigh Acres Fire and Rescue District is proposing to raise taxes on parcels to 3 mills per thousand dollars worth of evaluation. Property values have plummeted in Lehigh to 49 percent of what they were worth last year, according to the county appraiser’s office.

And the latest move by the commissioners who oversee the operation of the fire board, there is a proposal to tax every parcel in Lehigh, some 129,000 in number, with a special assessment tax of $100 a parcel. An attorney from Jacksonville has been hired by the board for $250 an hour to get the proposal on the ballot for voting before the end of the year. The board believes it can raise $12.5 million.

It is doubtful, many believe, that the community will vote to tax itself with a special assessment in these difficult economic times.

Meanwhile, the fire department faces bankruptcy within a couple of years if more money cannot be found to fund it. The department will have to dip into its reserves or lay off firefighters. Chief Donald Adams has said he would have to lay off 37 firefighters and EMTs and the fire board has asked him to keep them on until the end of September, which will cause the chief to dip into the reserves to pay for salaries and benefits to the tune of around $700,000.

A special blue ribbon panel of Lehigh leaders has submitted its version of a budget which would mean the laying of of only 17 firefighters this year. The union has rejected the special blue ribbon panel’s budget. And members of the board say they have not had an opportunity as of last week to look into the panel’s recommendations and suggestions to keep the fire department solvent.

Public meetings have been held concerning the financial crisis the fire department is in, but mostly only firefighters and their families attend. Few members of the general public show up for these meetings although they have been highly publicized.

See ECWCD Spreadsheet at Lehighacrescitizen.com.